MARKET REPORT December
20, 2013
The Markets saw a tinge of jitters yesterday as it reacted
to minor tapering by the Fed beginning next month. Reacting to this, the Markets
opened on a minor positive note, slipped in the red immediately and spent the
entire session in a very capped range moving mostly sideways. The Markets
opened gave its intraday high of 6263.75 in the early minutes of the trade. It
however immediately slipped into the red and traded negative and sideways for
the entire session thereafter. It gave its intraday low of 6150.70 while attempting
a feeble intraday recovery and finally ended the day at 6166.65 posting a loss
of 50.50 points or 0.81% while forming a higher top and higher bottom on the
Daily High Low Charts.
MARKET TREND FOR TODAY
Today, some sense of insecurity is likely to prevail in the
Markets and this is likely to cause a lower opening in the Markets. The Markets
are expected to see a modestly negative opening and the levels of 50-DMA is
likely to be tested at Close levels. The lower opening is likely to cause the
Markets open below its 50-DMA and it would be critically important for the
Markets to recover and trade above 50-DMA.
For today, the levels of 6195 and 6230 are likely to act as
resistance on the upper side and the levels of 6145 and 6110 are immediate
supports on the Daily Charts.
The RSI—Relative Strength Index on the Daily Chart is 49.2470
and it is neutral as it show no bullish or bearish divergence or any kind of
failure swings. The Daily MACD still continue to remain below its signal line
and is therefore, bearish.
On the derivative side, NIFTY December futures have shed
over 30.69 lakh shares or 13.92% in Open Interest. This can be attributed to
some rollovers that were seen. Also, while remaining sellers in Futures
segment, FIIs have been reported net buyers in Cash segment. This signifies
that while making purchases in cash segment, FIIs have preferred to hedge these
positions by shorting in the derivative segments.
Given this, the pattern analysis of the Markets shows that
the levels of 50-DMA have hold good so far as of today. However, today’s
negative opening would cause the Markets open lower than its 50-DMA and this is
likely to cause some temporary weakness in the Markets. However, even with
this, the intraday trajectory would remain very critically important as this
can turnout to be mere consolidation at these levels than a downward breach.
All and all, given this reading, we continue to advise to
refrain from creating short positions in the Markets. This is because of two
reasons. One – there has been significant creation of short positions in the
Markets that can cause short covering; and second – the defensive stocks will
continue to out perform and sectoral out performance can be seen. While
remaining light on positions and avoiding over exposure and shorts, cautious
outlook is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
